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Business News | Indian cashew processors charge on demand, revenue to rise 15%: report

New Delhi [India]Jan 22 (ANI): Higher price realization and increased domestic demand are expected to lift the revenue of India’s cashew processing industry beyond Rs 30,000 crore next fiscal year (2023 -24), the highest so far, Crisil Ratings said.

This forecast, according to the rating agency, is likely to be boosted by 15 percent annual growth in revenue in the current and following fiscal years.

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As a result, processors’ operating margins are likely to improve by 200 basis points (2 percentage points) to an all-time high of 7% this fiscal year (2022-23) and remain at a similar level next fiscal year.

Record operating margins will be supported by an 8% to 10% increase in spreads between raw cashew and kernel prices, the ratings agency said. Spreads refer to the difference between two prices.

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India remains the world’s largest cashew consumer, processing almost half of the world’s cashew seeds and consuming around 40% of global production. The United States is a distant second, accounting for 10 to 15 percent of global consumption.

“In contrast, India exports just 10 percent of its production, up from 35 percent in pre-pandemic times. That is due to an overwhelming increase in domestic demand, which replaces exports,” he said.

On the price side, cashew prices are expected to range from Rs 615-625 per kg this fiscal year, up almost 5% yoy, driven by increased domestic demand, fueled by the opening of hotels, restaurants and cafes after the pandemic.

“Cashew processors are currently operating near full capacity. With demand increasing, we anticipate that they will increase capacity by a fifth in the medium term. But there will be low reliance on debt to finance this, as well as the increase of working capital requirements because cash flows are robust,” he said. (AND ME)

(This is an auto-generated, raw story from the syndicated news feed, the body of the content may not have been modified or edited by LatestLY staff)

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